Expedia, Inc. Reports Third Quarter 2013 Results
BELLEVUE, Wash.—October 30, 2013—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for the third quarter ended September 30, 2013.
• Room nights grew 20% year-over-year driven by eLong™ and Brand Expedia®. Revenue grew 17% year-over year for the third quarter of 2013 due to growth in hotel room nights and advertising and media revenue. Brand Expedia, trivago®and Hotels.com®drove the revenue growth, with trivago on track to grow its full-year revenue approximately 85% versus 2012.
• Through a strategic marketing agreement, Brand Expedia agreed to power both the US and Canadian Travelocity branded websites. The Brand Expedia-powered sites are expected to launch in the first half of 2014.
• The combination of healthy top line growth and leverage on fixed costs led to Adjusted EBITDA* improving 16% year-over-year as compared to third quarter 2012.
• Expedia, Inc. brands collectively achieved nearly 80 million cumulative mobile app downloads since launch, including approximately 35 million downloads at eLong as well as 25 million and 18 million downloads of the Hotels.com and Brand Expedia mobile booking apps, respectively.
• To date in 2013, Expedia, Inc. repurchased 8.0 million common shares for an aggregate purchase price of $435 million excluding transaction costs, including 6.0 million common shares since the beginning of the third quarter.
Discussion of Results
The information presented within treats the domestic and international operations previously associated with Expedia’s TripAdvisor® Media Group as discontinued operations and accounts for the reverse stock split that occurred on December 20, 2011. The results include Expedia.com®, Hotels.com®, Hotwire.com®, Expedia® Affiliate Network, Classic Vacations®, Expedia Local Expert®, Expedia® CruiseShipCenters®, Egencia®, eLong, Venere® Net SpA and trivago GmbH; in addition to the related international points of sale.
Expedia and AirAsia™ formed a joint venture on July 1, 2011, which is 50% owned by Expedia; therefore, subsequent results do not include the Brand Expedia websites contributed to the joint venture.
The results include trivago GmbH following our acquisition of a controlling interest during March 2013. The impacts are discussed in more detail below. Unless otherwise noted, all comparisons below are versus the third quarter of 2012.
Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 15% (15% excluding foreign exchange) for the third quarter of 2013, primarily driven by Brand Expedia, Hotels.com and eLong, and, to a lesser extent, an increase in air tickets.
For the third quarter of 2013, average daily room rates were essentially flat year-over-year while average airfares rose by 3%. Air tickets sold grew by 7% year-over-year primarily due to strong growth at Brand Expedia. Domestic bookings increased 13% and international bookings increased 18% (17% excluding foreign exchange) for the third quarter of 2013. International bookings totaled $4.6 billion for the third quarter of 2013, accounting for 44% of worldwide bookings versus 43% in the prior year.
Revenue increased 17% (17% excluding foreign exchange) for the third quarter of 2013, primarily driven by increases in hotel room nights stayed as well as advertising and media revenue, partially offset by a decrease in revenue per room night. The trivago acquisition added approximately 6 percentage points to year-over-year revenue growth for the third quarter of 2013. Domestic revenue increased 12% and international revenue increased 23% (23% excluding foreign exchange) for the third quarter of 2013. International revenue equaled $685 million for the third quarter of 2013, representing 49% of worldwide revenue versus 46% in the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 13.4% for the third quarter of 2013, an increase of 19 basis points compared to the third quarter of 2012. The increase primarily relates to a favorable mix shift to our higher margin products, including advertising and media revenue as well as hotel revenue, partially offset by lower revenue per room night on our hotel product.
Product & Services Detail
As a percentage of total worldwide revenue in the third quarter of 2013, hotel accounted for 73%, air accounted for 7% and all other revenue sources, including advertising and media revenue, accounted for the remaining 20%.
Worldwide hotel revenue increased 11% for the third quarter of 2013 driven by a 20% increase in room nights stayed due to continued momentum at eLong and Brand Expedia, partially offset by a 7% decrease in revenue per room night.
Revenue per room night decreased primarily due to continued hotel mix shift to Asia-Pacific, efforts to expand our global supply portfolio, including contracts signed as part of our Expedia® Traveler Preference™ (ETP) program, and promotional activities such as couponing and growing our loyalty programs’ membership.
Worldwide air revenue increased 16% for the third quarter of 2013 due to a 9% increase in revenue per ticket as well as a 7% increase in air tickets sold.
All other revenue (excluding hotel and air) increased 44% for the third quarter of 2013 through strong growth in advertising and media revenue generated by trivago.
Expedia, Inc. and Travelocity signed an exclusive strategic marketing agreement whereby Expedia® will power the technology platforms for Travelocity-branded websites in the US and Canada, while providing Travelocity with access to Expedia, Inc.’s extensive global supply and customer service operations.
Egencia® signed agreements to power corporate travel management solutions for Dixon Hughes Goodman, the largest certified public accounting firm in the Southern U.S. as well as leading air cargo provider Swissport. Egencia also launched a new rail booking platform in the UK in partnership with TheTrainline.com, the UK’s number one independent online rail ticket retailer.
Expedia, Inc. signed distribution agreements with several international airlines, including Mexico’s national airline Aeromexico; Malaysia Airlines, named Asia’s Leading Airline by the World Travel Awards in 2013; and Qatar Airways, voted Airline of the Year 2011 & 2012 by Skytrax Airline Global Industry Audit.
AirAsia Expedia was named Asia’s Best Brand at the 2013 CMO Asia Awards, a designation determined by consumer mind share, market share, and commitment share, as indicated by a brand’s strength in encouraging customers to buy from that brand in the future.
Technology Platform Investment and Innovation
Expedia.com announced an agreement intended to expand the online travel company’s accommodations options by surfacing HomeAway vacation rental properties on Expedia.com. The pilot – expected to launch next year – will include properties throughout the US and Mexico.
Egencia introduced the Intelligent Service Platform™, a new initiative aimed at smartly infusing technology into the customer service channel through the use of enhanced interactive voice response (IVR) technology for corporate travelers across North America.
Expedia® Media Solutions, the advertising sales division of Expedia, Inc., continues to exhibit strong growth by generating 22% year-over-year revenue growth in the third quarter of 2013.
Worldwide Hotel Portfolio
At quarter-end, Expedia, Inc. global websites, including eLong, featured more than 240,000 bookable properties. Expedia, Inc. sites offer almost 180,000 hotels in EMEA and APAC countries. The Expedia Traveler Preference (ETP) program continues to make great strides within the lodging community; approximately 90% of the more than 35,000 contracted hotels currently transact under the program, including more than 10,000 hotels associated with chain partners.
Expedia Lodging Partner Services signed partnership agreements that include provisions allowing for distribution under the Expedia Traveler Preference program with several hotel management companies and brands, including Benchmark Management Co.; Canada’s largest hotel brand Coast Hotels; leading guest generation provider for vacation properties LeisureLink, Inc.; and Vantage Hospitality, the world’s 8th largest hotel and hospitality company.
Subsequent to quarter-end, Expedia, Inc. underwent a reorganization to more closely integrate the Lodging Partner Services division within Brand Expedia, in a move intended to strengthen the alignment between supply and consumer demand. Though now organizationally aligned with Brand Expedia, the Lodging Partner Services organization will continue to serve all Expedia, Inc. brands and B2B business units worldwide.
New Distribution Channels
During the first month of Brand Expedia’s Trip-A-Day Giveaway campaign, the Expedia Hotels & Flights mobile app experienced a nearly 50% lift in downloads to become the #1 Free Travel App in the iTunes store.
Egencia unveiled the next-generation Egencia® TripNavigator iPhone app giving business travelers turn-by-turn guidance throughout the trip as well as access to Egencia® AssistMe, a new feature that integrates traveler assistance into the user interface to deliver a much higher level of personalized customer service.
Hotels.com became the first third-party travel app to be included in US automaker Ford’s “Sync with AppLink” program, enabling drivers to use voice activation to search Hotels.com lodging content for nearby accommodations.
Hotels.com also rolled out new functionality on its iPhone and iPad apps to notify Welcome Rewards® members in 89 countries when they have earned a free night. Members of the loyalty program in the US will also receive notifications via the app when Welcome Rewards points have been earned.